##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended:
 June 30, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 0-02517
 TOREADOR RESOURCES CORPORATION
  Delaware
    
    75-0991164(State or other jurisdiction of incorporation)
    
    (I.R.S. Employer Identification Number)
 4809 Cole Avenue, Suite 108
Dallas, Texas 75205
 Registrants telephone number, including area code: (214) 559-3933
 þ o
  o þ o
 o þ




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##### Table of Contents



TOREADOR RESOURCES CORPORATION
 TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Consolidated Balance Sheets  June 30, 2006 and December 31, 2005
    
    
    1Consolidated Statements of Operations  for the three months ended June 30, 2006 and 2005
    
    
    2Consolidated Statements of Operations  for the six months ended June 30, 2006 and 2005
    
    
    3Consolidated Statements of Cash Flows  for the six months ended June 30, 2006 and 2005
    
    
    4Notes to Unaudited Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    26PART II. OTHER INFORMATIONItem 4. Submission of Matters to a Vote of Security Holders
    
    
    27Item 6. Exhibits
    
    
    28SIGNATURES
    
    
    29Rule 13a-14(a) Certification of Chief Executive OfficerRule 13a-14(a) Certification of Chief Financial OfficerRule 13a-14(a) Certification of Chief Accounting OfficerSection 1350 Certifications




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TOREADOR RESOURCES CORPORATION
 
 CONSOLIDATED BALANCE SHEETS  (in thousands, except share data)
 June 30,
    
    December 31,2006
    
    2005(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    53,728
    
    
    $
    92,507Accounts and notes receivable
    
    
    16,096
    
    
    
    18,506Income taxes receivable
    
    
    4,947
    
    
    
    4,736Other
    
    
    1,916
    
    
    
    3,243Total current assets
    
    
    76,687
    
    
    
    118,992Oil and gas properties, net, using successful efforts
method of accounting
    
    
    175,412
    
    
    
    134,035Advances to and investments in unconsolidated entities
    
    
    2,508
    
    
    
    2,251Goodwill
    
    
    2,487
    
    
    
    2,487Other assets
    
    
    6,053
    
    
    
    5,415$
    263,147
    
    
    $
    263,180LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    27,652
    
    
    $
    22,479Convertible debenture  related party
    
    
    
    
    
    
    810Income taxes payable
    
    
    956
    
    
    
    908Total current liabilities
    
    
    28,608
    
    
    
    24,197Long-term accrued liabilities
    
    
    697
    
    
    
    1,043Long-term debt
    
    
    
    
    
    
    5,000Long-term asset retirement obligation
    
    
    2,457
    
    
    
    2,225Deferred income taxs
    
    
    10,620
    
    
    
    10,221Convertible senior notes
    
    
    86,250
    
    
    
    86,250Total liabilities
    
    
    128,632
    
    
    
    128,936Stockholders equity:Preferred stock, Series A-1, $1.00 par value,
4,000,000 shares authorized; liquidation
preference of $1,800; 72,000 shares issued and
outstanding
    
    
    72
    
    
    
    72Common stock, $0.15625 par value, 30,000,000
shares authorized;16,647,761 and 16,142,824
shares issued and outstanding
    
    
    2,601
    
    
    
    2,522Additional paid-in capital
    
    
    109,224
    
    
    
    106,099Retained earnings
    
    
    36,842
    
    
    
    31,346Accumulated other comprehensive loss
    
    
    (11,690
    )
    
    
    (3,261
    )Treasury stock, at cost, 721,027 shares
    
    
    (2,534
    )
    
    
    (2,534
    )Total stockholders equity
    
    
    134,515
    
    
    
    134,244$
    263,147
    
    
    $
    263,180
  1




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TOREADOR RESOURCES CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS  (in thousands, except per share data)
 Three Months Ended June 30,2006
    
    2005Oil and natural gas sales
    
    $
    10,303
    
    
    $
    7,164Operating costs and expenses:Lease operating
    
    
    2,653
    
    
    
    2,140Exploration and acquisition
    
    
    972
    
    
    
    431Depreciation, depletion and amortization
    
    
    1,466
    
    
    
    950General and administrative
    
    
    2,377
    
    
    
    1,955Total operating costs and expenses
    
    
    7,468
    
    
    
    5,476Operating income
    
    
    2,835
    
    
    
    1,688Other income (expense):Equity in earnings of unconsolidated investments
    
    
    96
    
    
    
    35Gain on sale of properties and other assets
    
    
    180
    
    
    
    12Foreign currency exchange gain (loss)
    
    
    899
    
    
    
    (53
    )Interest and other income
    
    
    1,668
    
    
    
    100Interest expense
    
    
    (1,205
    )
    
    
    (103
    )Total other income (expense), net
    
    
    1,638
    
    
    
    (9
    )Income before taxes
    
    
    4,473
    
    
    
    1,679Income tax provision (benefit)
    
    
    1,884
    
    
    
    (185
    )Income from continuing operations
    
    
    2,589
    
    
    
    1,864Income from discontinued operations, net of tax
    
    
    
    
    
    
    1Net income
    
    
    2,589
    
    
    
    1,865Preferred dividends
    
    
    (41
    )
    
    
    (40
    )Income available to common shareholders
    
    $
    2,548
    
    
    $
    1,825Basic income per share
    
    $
    0.16
    
    
    $
    0.13Diluted income per share
    
    $
    0.15
    
    
    $
    0.12Weighted average shares outstanding:Basic
    
    
    15,728
    
    
    
    14,171Diluted
    
    
    16,775
    
    
    
    15,610
  2




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TOREADOR RESOURCES CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS  (in thousands, except per share data)
 Six Months Ended June 30,2006
    
    2005Revenue:Oil and natural gas sales
    
    $
    20,072
    
    
    $
    13,578Operating costs and expenses:Lease operating
    
    
    5,088
    
    
    
    4,260Exploration and acquisition
    
    
    2,025
    
    
    
    805Depreciation, depletion and amortization
    
    
    2,937
    
    
    
    1,867General and administrative
    
    
    4,897
    
    
    
    3,759Total operating costs and expenses
    
    
    14,947
    
    
    
    10,691Operating income
    
    
    5,125
    
    
    
    2,887Other income (expense):Equity in earnings of unconsolidated investments
    
    
    192
    
    
    
    124Gain on sale of properties and other assets
    
    
    651
    
    
    
    12Foreign currency exchange gain (loss)
    
    
    1,529
    
    
    
    (40
    )Interest and other income
    
    
    3,249
    
    
    
    345Interest expense
    
    
    (2,481
    )
    
    
    (34
    )Total other income, net
    
    
    3,140
    
    
    
    407Income before taxes
    
    
    8,265
    
    
    
    3,294Income tax provision (benefit)
    
    
    2,687
    
    
    
    (123
    )Income from continuing operations
    
    
    5,578
    
    
    
    3,417Income from discontinued operations, net of tax
    
    
    
    
    
    
    11Net income
    
    
    5,578
    
    
    
    3,428Preferred dividends
    
    
    (81
    )
    
    
    (603
    )Income available to common shareholders
    
    $
    5,497
    
    
    $
    2,825Basic income per share
    
    $
    0.35
    
    
    $
    0.21Diluted income per share
    
    $
    0.33
    
    
    $
    0.20Weighted average shares outstanding:Basic
    
    
    15,618
    
    
    
    13,490Diluted
    
    
    16,717
    
    
    
    14,565
  3




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TOREADOR RESOURCES CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS  (in thousands)
 Six Months Ended June 30,2006
    
    2005Cash flows from operating activities:Net income
    
    $
    5,578
    
    
    $
    3,428Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    2,937
    
    
    
    1,867Dry holes and abandonments
    
    
    92
    
    
    
    126Gain on sale of properties
    
    
    (651
    )
    
    
    (12
    )Equity in earnings of unconsolidated investments
    
    
    (192
    )
    
    
    (124
    )Stock based compensation
    
    
    1,138
    
    
    
    77Realized (gains) losses on foreign currency transactions
    
    
    37
    
    
    
    (10
    )Change in operating assets and liabilities:(Increase) decrease in accounts and notes receivables
    
    
    842
    
    
    
    (1,453
    )Increase in income taxes receivable
    
    
    
    
    
    
    (3,515
    )(Increase) decrease in other current assets
    
    
    640
    
    
    
    (1,702
    )Increase in accounts payable and accrued liabilities
    
    
    6,888
    
    
    
    4,698Decrease in income taxes payable
    
    
    (252
    )
    
    
    (1,633
    )Deferred income taxes
    
    
    2,320
    
    
    
    2,521Net cash provided by operating activities
    
    
    19,377
    
    
    
    4,268Cash flows from investing activities:Expenditures for property and equipment
    
    
    (51,990
    )
    
    
    (33,804
    )Proceeds from the sale of properties and equipment
    
    
    1,678
    
    
    
    28Investment in unconsolidated subsidiaries
    
    
    (65
    )
    
    
    (510
    )Net cash used in investing activities
    
    
    (50,377
    )
    
    
    (34,286
    )Cash flows from financing activities:Borrowings from long-term debt
    
    
    
    
    
    
    1,963Repayments of long-term debt
    
    
    (5,000
    )
    
    
    (2,000
    )Proceeds from issuance of common stock, net
    
    
    969
    
    
    
    34,180Payment of preferred dividends
    
    
    (81
    )
    
    
    (105
    )Net cash provided by (used in) financing activities
    
    
    (4,112
    )
    
    
    34,038Net increase (decrease) in cash and cash equivalents
    
    
    (35,112
    )
    
    
    4,020Effects of foreign currency translation on cash and cash
equivalents
    
    
    (3,667
    )
    
    
    809Cash and cash equivalents, beginning of period
    
    
    92,507
    
    
    
    4,977Cash and cash equivalents, end of period
    
    $
    53,728
    
    
    $
    9,806
  4




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TOREADOR RESOURCES CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1  BASIS OF PRESENTATION
  New Accounting Pronouncements
    5




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NOTE 2  INSURANCE CLAIM ON 2005 BLACK SEA INCIDENTS
    NOTE 3  STOCK-BASED COMPENSATION
   6




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Three Months Ended
    
    Six Months EndedJune 30, 2005
    
    June 30, 2005Income applicable to common shares, as reported
    
    $
    1,825
    
    
    $
    2,825Basic earnings per share as reported
    
    
    0.13
    
    
    
    0.21Diluted earnings per share reported
    
    
    0.12
    
    
    
    0.20Pro-forma stock-based compensation costs
under the fair value method, net of related
tax
    
    
    15
    
    
    
    41Pro-forma income applicable to common
shares, as under the fair-value method
    
    
    1,810
    
    
    
    2,784Pro-forma basic earnings per share under
the fair-value method
    
    
    0.13
    
    
    
    0.21Pro-forma diluted earnings per share under
the fair-value method
    
    
    0.12
    
    
    
    0.20
  Options granted in2005
    
    2004
    
    2003Dividend yield per share (1)
    
    
    
    
    
    
    
    
    
    
    Volatility (2)
    
    
    70.9
    %
    
    
    43 - 54
    %
    
    
    42
    %Risk-free interest rate (3)
    
    
    4.0
    %
    
    
    3.3 - 4.6
    %
    
    
    2.8
    %Expected lives (4)
    
    5 years
    
    3 years
    
    10 years
 
 (1)
    
    Historically, we have not paid dividends on common shares and do not anticipate doing
so during the expected lives of these options.(2)
    
    We estimated volatility based on historic rates of return on our common stock over
periods similar to the expected lives of the related options.(3)
    
    We estimated the risk free rate based on treasury issues with lives similar to the
expected lives of the related options based on quotes available at or near the dates of
grant of the related options.(4)
    
    We estimated expected lives considering, a) the contractual term of the related
options, b) the average age of options exercised near the date of grant of the related
options and c) our expectation of our stock performance during the contractual period.      7




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WEIGHTEDAVERAGE EXERCISESHARES
    
    PRICEOutstanding at January 1, 2006
    
    
    858,940
    
    
    $
    5.07Granted
    
    
    
    
    
    
    Exercised
    
    
    (173,070
    )
    
    
    (4.83
    )Forfeited
    
    
    
    
    
    
    Outstanding at June 30, 2006
    
    
    685,870
    
    
    $
    5.09Exercisable at June 30, 2006
    
    
    672,536
    
    
    $
    4.87
    WEIGHTED-AVERAGEEXERCISEYEAR
    
    OPTION TYPE
    
    SHARES
    
    PRICE
    
    FAIR VALUE2005
    
    
    Exercise price equal to market price
    
    
    20,000
    
    
    $
    16.90
    
    
    $
    7.312004
    
    
    Exercise price greater than market price
    
    
    352,700
    
    
    $
    5.50
    
    
    $
    1.60Exercise price equal to market price
    
    
    90,000
    
    
    $
    6.89
    
    
    $
    2.502003
    
    
    Exercise price equal to market price
    
    
    120,000
    
    
    $
    3.10
    
    
    $
    1.12
 8




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Number Outstanding
    
    Number ExercisableIntrinsic
    
    
    
    
    
    IntrinsicValue
    
    
    
    
    
    Value
    
    Weighted Average RemainingExercise Price
    
    Shares
    
    (in thousands)
    
    Shares
    
    (in thousands)
    
    Contractual Life in Years$     2.75
    
    
    45,000
    
    
    $
    1,266
    
    
    
    45,000
    
    
    $
    1,266
    
    
    
    2.243.00
    
    
    5,000
    
    
    
    141
    
    
    
    5,000
    
    
    
    141
    
    
    
    2.923.10
    
    
    85,000
    
    
    
    2,391
    
    
    
    85,000
    
    
    
    2,391
    
    
    
    6.973.12
    
    
    4,420
    
    
    
    124
    
    
    
    4,420
    
    
    
    124
    
    
    
    4.223.88
    
    
    5,000
    
    
    
    141
    
    
    
    5,000
    
    
    
    141
    
    
    
    3.334.12
    
    
    53,000
    
    
    
    1,491
    
    
    
    53,000
    
    
    
    1,491
    
    
    
    5.924.51
    
    
    20,000
    
    
    
    563
    
    
    
    20,000
    
    
    
    563
    
    
    
    5.634.96
    
    
    40,000
    
    
    
    1,125
    
    
    
    40,000
    
    
    
    1,125
    
    
    
    7.895.00
    
    
    200,133
    
    
    
    5,630
    
    
    
    200,133
    
    
    
    5,630
    
    
    
    2.805.50
    
    
    170,017
    
    
    
    4,783
    
    
    
    170,017
    
    
    
    4,782
    
    
    
    6.325.75
    
    
    15,800
    
    
    
    444
    
    
    
    15,800
    
    
    
    444
    
    
    
    4.695.95
    
    
    15,000
    
    
    
    422
    
    
    
    15,000
    
    
    
    422
    
    
    
    4.8813.75
    
    
    7,500
    
    
    
    211
    
    
    
    7,500
    
    
    
    211
    
    
    
    8.3916.90
    
    
    20,000
    
    
    
    563
    
    
    
    6,666
    
    
    
    187
    
    
    
    8.89$     5.10
    
    
    685,870
    
    
    $
    19,295
    
    
    
    672,536
    
    
    $
    18,918
    
    
    
    5.13
   Grant-DateShares
    
    Fair ValueNon-vested at January 1, 2006
    
    
    114,560
    
    
    $
    20.10Shares granted
    
    
    208,075
    
    
    
    29.29Shares vested
    
    
    (44,479
    )
    
    
    (16.90
    )Shares forfeited
    
    
    (300
    )
    
    
    (30.83
    )Non-vested at June 30,2006
    
    
    277,856
    
    
    $
    27.49
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NOTE 4  EARNINGS PER COMMON SHARE
   Three Months Ended June 30,
    
    Six Months Ended June 30,2006
    
    2005
    
    2006
    
    2005(in thousands, except per share data)Basic earnings per share:Numerator:Income from continuing operations, net of tax
    
    $
    2,589
    
    
    $
    1,864
    
    
    $
    5,578
    
    
    $
    3,417Income from discontinued operations, net of tax
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    11Net income
    
    
    2,589
    
    
    
    1,865
    
    
    
    5,578
    
    
    
    3,428Less: dividends on preferred shares
    
    
    41
    
    
    
    40
    
    
    
    81
    
    
    
    603Net income available to common shares
    
    $
    2,548
    
    
    $
    1,825
    
    
    $
    5,497
    
    
    $
    2,825Denominator:Common shares outstanding
    
    
    15,728
    
    
    
    14,171
    
    
    
    15,618
    
    
    
    13,490Income per share available to common shares
    
    $
    0.16
    
    
    $
    0.13
    
    
    $
    0.35
    
    
    $
    0.21Diluted earnings per share:Numerator:Income from continuing operations, net of tax
    
    $
    2,589
    
    
    $
    1,864
    
    
    $
    5,578
    
    
    $
    3,417Income from discontinued operations, net of tax
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    11Net income
    
    
    2,589
    
    
    
    1,865
    
    
    
    5,578
    
    
    
    3,428Plus: interest on convertible debt
    
    
    
    
    
    
    14
    
    
    
    6
    
    
    
    54Less: dividends on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    603Income available to common shares
    
    $
    2,589
    
    
    $
    1,879
    
    
    $
    5,584
    
    
    $
    2,879Denominator:Common shares outstanding
    
    
    15,728
    
    
    
    14,171
    
    
    
    15,618
    
    
    
    13,490Common stock options and warrants
    
    
    597
    
    
    
    769
    
    
    
    596
    
    
    
    769Conversion of preferred shares
    
    
    450
    
    
    
    450
    
    
    
    450
    
    
    
    
    (1)Conversion of 5.0% notes payable
    
    
    
    (2)
    
    
    
    (2)
    
    
    
    (2)
    
    
    
    (2)Conversion of debenture
    
    
    
    (3)
    
    
    220
    
    
    
    53
    
    
    
    306Diluted shares outstanding
    
    
    16,775
    
    
    
    15,610
    
    
    
    16,717
    
    
    
    14,565Income per share available to common shares
common shares
    
    $
    0.15
    
    
    $
    0.12
    
    
    $
    0.33
    
    
    $
    0.20
 
 (1)
    
    Preferred shares were anti-dilutive for the six months ended June 30, 2005.(2)
    
    Conversion of these securities would result in issuance of 2,014,716 common shares that are
antidulitive; therefore, there are no dilutive shares added at June 30, 2006. The 5% notes
payable were not issued until September 27, 2005 and September 30, 2005.(3)
    
    The 7.85 % notes payable were converted to common stock in January 2005. 10




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NOTE 5  COMPREHENSIVE LOSS
  Three Months Ended June 30,
    
    Six Months Ended June 30,2006
    
    2005
    
    2006
    
    2005Net income
    
    $
    2,589
    
    
    $
    1,825
    
    
    $
    5,578
    
    
    $
    2,825Foreign currency translation adjustment
    
    
    (8,216
    )
    
    
    (3,297
    )
    
    
    (8,466
    )
    
    
    (5,183
    )Other
    
    
    37
    
    
    
    
    
    
    
    37
    
    
    
    Comprehensive loss
    
    $
    (5,607
    )
    
    $
    (1,472
    )
    
    $
    (2,851
    )
    
    $
    (2,358
    )
 NOTE 6  LONG-TERM DEBT
 Convertible Senior Notes due October 1, 2025
   Revolving Line of Credit with Natexis Banques Populaires
  11




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##### Table of Contents



Revolving Line of Credit with Texas Capital Bank, N.A.
  Convertible Subordinated Notes
  Convertible Debenture
  Interest Payments
  NOTE 7  ASSET RETIREMENT OBLIGATIONS
  12




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2006
    
    2005Asset retirement obligation January 1
    
    $
    2,225
    
    
    $
    2,331Asset retirement accretion expense
    
    
    73
    
    
    
    69Property additions
    
    
    15
    
    
    
    Foreign currency translation adjustment
    
    
    144
    
    
    
    (225
    )Asset retirement obligation at June 30.
    
    $
    2,457
    
    
    $
    2,175
 NOTE 8  GEOGRAPHIC OPERATING SEGMENT INFORMATION
   Three Months Ended June 30, 2006UnitedStates
    
    France
    
    Turkey
    
    Romania
    
    Hungary
    
    TotalRevenues
    
    $
    1,863
    
    
    $
    7,441
    
    
    $
    999
    
    
    $
    
    
    
    $
    
    
    
    $
    10,303Costs and expenses
    
    
    2,608
    
    
    
    3,726
    
    
    
    625
    
    
    
    
    
    
    
    509
    
    
    
    7,468Operating income (loss)
    
    $
    (745
    )
    
    $
    3,715
    
    
    $
    374
    
    
    $
    
    
    
    $
    (509
    )
    
    $
    2,835
 Three Months Ended June 30, 2005UnitedStates
    
    France
    
    Turkey
    
    Romania
    
    Hungary
    
    TotalRevenues
    
    $
    1,744
    
    
    $
    4,745
    
    
    $
    675
    
    
    $
    
    
    
    $
    
    
    
    $
    7,164Costs and expenses
    
    
    2,706
    
    
    
    2,245
    
    
    
    512
    
    
    
    13
    
    
    
    
    
    
    
    5,476Operating income (loss)
    
    $
    (962
    )
    
    $
    2,500
    
    
    $
    163
    
    
    $
    (13
    )
    
    $
    
    
    
    $
    1,688
 Six Months Ended June 30, 2006UnitedStates
    
    France
    
    Turkey
    
    Romania
    
    Hungary
    
    TotalRevenues
    
    $
    3,493
    
    
    $
    14,730
    
    
    $
    1,849
    
    
    $
    
    
    
    $
    
    
    
    $
    20,072Costs and expenses
    
    
    5,801
    
    
    
    6,963
    
    
    
    1,250
    
    
    
    2
    
    
    
    931
    
    
    
    14,947Operating income (loss)
    
    $
    (2,308
    )
    
    $
    7,767
    
    
    $
    599
    
    
    $
    (2
    )
    
    $
    (931
    )
    
    $
    5,125
 Six Months Ended June 30, 2005UnitedStates
    
    
    France
    
    
    Turkey
    
    
    Romania
    
    
    Hungary
    
    
    TotalRevenues
    
    $
    3,265
    
    
    $
    9,036
    
    
    $
    1,277
    
    
    $
    
    
    
    $
    
    
    
    $
    13,578Costs and expenses
    
    
    5,068
    
    
    
    4,442
    
    
    
    1,165
    
    
    
    16
    
    
    
    
    
    
    
    10,691Operating income (loss)
    
    $
    (1,803
    )
    
    $
    4,594
    
    
    $
    112
    
    
    $
    (16
    )
    
    $
    
    
    
    $
    2,887Total AssetsUnitedStates
    
    France
    
    Turkey
    
    Romania
    
    Hungary
    
    TotalJune 30, 2006 (1)
    
    $
    54,119
    
    
    $
    76,425
    
    
    $
    107,373
    
    
    $
    13,271
    
    
    $
    11,959
    
    
    $
    263,147June 30, 2005 (1)
    
    $
    25,167
    
    
    $
    56,929
    
    
    $
    36,964
    
    
    $
    2,957
    
    
    $
    9,849
    
    
    $
    131,866
 
 (1)
    
    Total consolidated assets reflect the effect of intersegment eliminations. 13




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NOTE 9  INCOME TAXES
    14




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##### Table of Contents



ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  DISCLOSURES REGARDING FORWARD-LOOKING STATEME
  EXECUTIVE OVERVIEW
    
    
    Operating income of $5.1 million, compared with $2.9 million for the six months ended
June 30, 2005,
    
    Production of 341 MBOE, compared with 303 MBOE for the six months ended June 30, 2005,
    
    Cash flows from operating activities of $19.4 million, compared with $4.3 million for
the six months ended June 30, 2005,
 15




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LIQUIDITY AND CAPITAL RESOURCES
  Liquidity
   Senior Debt
   16




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##### Table of Contents



Preferred Stock
  Convertible Senior Notes
  Dividend and Interest Requirements
    Contractual Obligations
  17




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES
  Successful Efforts Method of Accounting
    18




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##### Table of Contents



Reserve Estimates
  Impairment of Oil and Natural Gas Properties
  Future Development and Abandonment Costs
  19




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##### Table of Contents



Income Taxes
   NEW ACCOUNTING PRONOUNCEMENTS
   20




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##### Table of Contents



RESULTS OF OPERATIONS
 COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
  For the Three Months Ended June 30,2006
    
    2005
    
    
    
    2006
    
    2005Production
    
    
    
    
    
    
    
    Average PriceOil (MBbls):
    
    
    
    
    
    
    
    Oil ($/Bbl):United States
    
    
    15
    
    
    16
    
    United States
    
    $
    64.09
    
    
    $
    48.80France
    
    
    112
    
    
    99
    
    France
    
    
    66.39
    
    
    
    47.98Turkey
    
    
    17
    
    
    16
    
    Turkey
    
    
    57.32
    
    
    
    41.74Total
    
    
    144
    
    
    131
    
    Total
    
    $
    65.06
    
    
    $
    47.31Gas (MMcf):
    
    
    
    
    
    
    
    Gas ($/Mcf):United States
    
    
    128
    
    
    135
    
    United States
    
    $
    6.67
    
    
    $
    6.69France
    
    
    
    
    
    
    
    France
    
    
    
    
    
    
    Turkey
    
    
    
    
    
    
    
    Turkey
    
    
    
    
    
    
    Total
    
    
    128
    
    
    135
    
    Total
    
    $
    6.67
    
    
    $
    6.69MBOE:
    
    
    
    
    
    
    
    $/BOE:United States
    
    
    37
    
    
    39
    
    United States
    
    $
    49.79
    
    
    $
    43.71France
    
    
    112
    
    
    99
    
    France
    
    
    66.39
    
    
    
    47.98Turkey
    
    
    17
    
    
    16
    
    Turkey
    
    
    57.32
    
    
    
    41.74Total
    
    
    166
    
    
    154
    
    Total
    
    $
    61.84
    
    
    $
    46.26
 Revenue
 Oil and natural gas sales
  21




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Costs and expenses
 Lease operating
  Exploration and acquisition.
  Depreciation, depletion and amortization
  General and administrative
  Other income and expense
  22




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##### Table of Contents



Income available to common shares
  Other comprehensive income
   June 30, 2006
    
    June 30, 2005Euro
    
    $
    1.2713
    
    
    $
    1.2092New Turkish Lira
    
    $
    0.6332
    
    
    $
    0.7497Romania Lei
    
    $
    0.0004
    
    
    $
    0.0004Hungarian Forint
    
    $
    0.0050
    
    
    
    (1
    )
 
 (1)
    
    There were no Hungarian operations during the three and six months ended June 30, 2005. 23




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COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
  For the Six Months Ended June 30,2006
    
    
    2005
    
    
    
    
    2006
    
    2005Production
    
    
    
    
    
    
    
    
    
    Average PriceOil (MBbls):
    
    
    
    
    
    
    
    
    
    Oil ($/Bbl):United States
    
    
    29
    
    
    
    30
    
    
    United States
    
    $
    61.49
    
    
    $
    47.90France
    
    
    237
    
    
    
    196
    
    
    France
    
    
    62.08
    
    
    
    46.08Turkey
    
    
    34
    
    
    
    33
    
    
    Turkey
    
    
    54.55
    
    
    
    39.09Total
    
    
    300
    
    
    
    259
    
    
    Total
    
    $
    61.18
    
    
    $
    45.42Gas (MMcf):
    
    
    
    
    
    
    
    
    
    Gas ($/Mcf):United States
    
    
    247
    
    
    
    260
    
    
    United States
    
    $
    6.35
    
    
    $
    6.44France
    
    
    
    
    
    
    
    
    
    France
    
    
    
    
    
    
    Turkey
    
    
    
    
    
    
    
    
    
    Turkey
    
    
    
    
    
    
    Total
    
    
    247
    
    
    
    260
    
    
    Total
    
    $
    6.35
    
    
    $
    6.44MBOE:
    
    
    
    
    
    
    
    
    
    $/BOE:United States
    
    
    70
    
    
    
    74
    
    
    United States
    
    $
    47.67
    
    
    $
    42.48France
    
    
    237
    
    
    
    196
    
    
    France
    
    
    62.08
    
    
    
    46.08Turkey
    
    
    34
    
    
    
    33
    
    
    Turkey
    
    
    54.55
    
    
    
    39.09Total
    
    
    341
    
    
    
    303
    
    
    Total
    
    $
    58.39
    
    
    $
    44.45
 Revenue
 Oil and natural gas sales
   Costs and expenses
 Lease operating
  24




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##### Table of Contents



Exploration and acquisition.
  Depreciation, depletion and amortization
  General and administrative
  Other income and expense
  Net income available to common shares
  Other comprehensive income
   25




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##### Table of Contents



June 30, 2006
    
    June 30, 2005Euro
    
    $
    1.2713
    
    
    $
    1.2092New Turkish Lira
    
    $
    0.6332
    
    
    $
    0.7497Romania Lei
    
    $
    0.0004
    
    
    $
    0.0004Hungarian Forint
    
    $
    0.0050
    
    
    
    (1
    )
 
 (1)
    
    There were no Hungarian operations during the three and six months ended June 30, 2005. 
 ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  
 ITEM 4  CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
      26




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Nominee
    
    Votes For
    
    Votes WithheldDavid M. Brewer
    
    
    12,780,839
    
    
    
    222,263Herbert L. Brewer
    
    
    11,397,101
    
    
    
    1,606,001Peter L. Falb
    
    
    12,803,815
    
    
    
    199,287G. Thomas Graves III
    
    
    11,589,274
    
    
    
    1,413,828William I. Lee
    
    
    11,231,830
    
    
    
    1,771,272Nigel J.B. Lovett
    
    
    11,653,018
    
    
    
    1,350,084John Mark McLaughlin
    
    
    12,733,522
    
    
    
    269,580Nicholas Rostow
    
    
    12,855,229
    
    
    
    147,873H.R. Sanders, Jr.
    
    
    11,230,930
    
    
    
    1,772,172Herbert C. Williamson III
    
    
    12,855,229
    
    
    
    147,873
  Votes For
    
    Votes Against
    
    Votes Abstaining
    
    Broker Non-Votes5,839,021
    
    
    284,534
    
    
    
    20,531
    
    
    
    6,859,022
 27




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##### Table of Contents



ITEM 6  EXHIBITS
 ExhibitNumber
    
    Description
    
    Incorporation by Reference10.1
    
    Summary of Amendment to Restricted Stock Award
Agreement of Thomas P. Kellogg, dated April 6, 2006
    
    Incorporated by
reference from
Exhibit 10.1 to the
Current Report on
Form 8-K filed on
April 12, 200610.2
    
    Amendment to Toreador Resources Corporation 2005
Long-Term Incentive Plan
    
    Incorporated by
reference from
Exhibit 10.1 to the
Current Report on
Form 8-K filed on
May 12, 200610.3
    
    Summary Sheet: 2006 Non-Employee Director Equity
Compensation
    
    Incorporated by
reference from
Exhibit 10.2 to the
Current Report on
Form 8-K filed on
May 12, 200610.4
    
    Form of 2006 Outside Director Restricted Stock Award
    
    Incorporated by
reference from
Exhibit 10.3 to the
Current Report on
Form 8-K filed on
May 12, 200610.5
    
    Michael Fitzgerald Employee Restricted Stock Award
Agreement dated May 30, 2006
    
    Incorporated by
reference from
Exhibit 10.1 to the
Current Report on
Form 8-K filed on
June 5, 200610.6
    
    Ed Ramirez Employee Restricted Stock Award Agreement
dated May 30, 2006
    
    Incorporated by
reference from
Exhibit 10.2 to the
Current Report on
Form 8-K filed on
June 5, 200631.1
    
    Rule 13a-14(a) Certification of Chief Executive Officer
    
    Filed Herewith31.2
    
    Rule 13a-14(a) Certification of Chief Financial Officer
    
    Filed Herewith31.3
    
    Rule 13a-14(a) Certification
of Chief Accounting Officer
    
    Filed Herewith32.1
    
    Section 1350 Certification of
Chief Executive Officer,Chief Financial Officer and Chief Accounting Officer
    
    Filed Herewith
 28




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##### Table of Contents



TOREADOR RESOURCES CORPORATION,RegistrantAugust 9, 2006
    
    
    
    /s/ G. Thomas Graves IIIG. Thomas Graves IIIPresident and Chief Executive OfficerAugust 9, 2006
    
    
    
    /s/ Douglas W. WeirDouglas W. WeirSenior Vice President and Chief Financial OfficerAugust 9, 2006
    
    
    
    /s/ Charles J. CampiseCharles J. CampiseVice President  Accounting and Chief AccountingOfficer
 29